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                                                       Calendar No. 897
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-430

======================================================================



 
      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2008

                                _______
                                

    July 24 (Legislative day, July 23), 2008.--Ordered to be printed

                                _______
                                

   Mr. Akaka, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2617]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs (hereinafter, 
``Committee''), to which was referred the bill (S. 2617) to 
increase, effective as of December 1, 2008, the rates of 
compensation for veterans with service-connected disabilities 
and the rates of dependency and indemnity compensation for the 
survivors of certain disabled veterans, having considered the 
same, reports favorably thereon with an amendment in the nature 
of a substitute, and recommends that the bill, as amended, do 
pass.

                              Introduction

    On February 2, 2008, Committee Chairman Daniel K. Akaka 
introduced S. 2617, a bill to increase, effective as of 
December 1, 2008, the rates of compensation for veterans with 
service-connected disabilities and the rates of dependency and 
indemnity compensation for the survivors of certain disabled 
veterans. Committee Ranking Minority Member Richard Burr is an 
original cosponsor of S. 2617, as are Committee Members John D. 
Rockefeller IV, Patty Murray, Sherrod Brown, Barack Obama, 
Bernard Sanders, Jon Tester, Jim Webb, Larry E. Craig, and 
Johnny Isakson. Senator Debbie Stabenow was later added as a 
cosponsor. The bill was referred to the Committee.

                           Committee Hearing

    On May 7, 2008, the Committee held a hearing on legislation 
pending before the Committee. Among the measures on which the 
Committee received testimony was S. 2617. Testimony on S. 2617, 
among other bills, was offered by: Keith Pedigo, Associate 
Deputy Under Secretary for Policy and Program Management, 
Department of Veterans Affairs; Carl Blake, National 
Legislative Director, Paralyzed Veterans of America; Richard 
Paul Cohen, Executive Director, National Organization of 
Veterans' Advocates, Inc.; Eric A. Hilleman, Deputy Director, 
National Legislative Service, Veterans of Foreign Wars; Ray 
Kelley, Legislative Director, AMVETS; Steve Smithson, Deputy 
Director, Veterans Affairs and Rehabilitation Commission, The 
American Legion; Joseph Violante, National Legislative 
Director, Disabled American Veterans; and Rick Weidman, 
Governmental Affairs Director, Vietnam Veterans of America.

                           Committee Meeting

    On June 26, 2008, the Committee met in open session to 
consider legislation pending before the Committee. Among the 
measures so considered was S. 2617. The Committee voted by 
voice vote to report favorably S. 2617, as amended, to the 
Senate.

               Summary of the Committee Bill as Reported

    The Committee bill contains freestanding provisions that 
would require the Secretary of Veterans Affairs to increase, 
effective December 1, 2008, the rates of, and limitations on, 
certain benefits paid by the Department of Veterans Affairs 
(hereinafter, ``VA'') by the same percentage as the cost-of-
living adjustment (hereinafter, ``COLA'') provided to Social 
Security recipients and VA pension beneficiaries that become 
effective on the same date. The COLA would apply to:
          1. basic compensation rates for veterans with 
        service-connected disabilities and the rates payable 
        for certain severe disabilities;
          2. the allowance for spouses, children, and dependent 
        parents paid to service-connected disabled veterans 
        rated 30 percent or more disabled;
          3. the annual clothing allowance paid to veterans 
        whose compensable disability requires the use of a 
        prosthetic or orthopedic appliance (including a 
        wheelchair) that tends to tear or wear out clothing or 
        requires the use of a medication prescribed by a 
        physician for a service-connected skin condition if the 
        medication causes irreparable damage to the veteran's 
        outergarments; and
          4. the dependency and indemnity compensation 
        (hereinafter, ``DIC'') rates paid to:
                  (a) surviving spouses of veterans whose 
                deaths were service-connected;
                  (b) surviving spouses for dependent children 
                below the age of 18;
                  (c) surviving spouses who are so disabled 
                that they need aid and attendance or are 
                permanently housebound;
                  (d) surviving spouses covered under section 
                1318 of title 38, United States Code; and
                  (e) the children of veterans whose deaths 
                were service-connected if no surviving spouse 
                is entitled to DIC, the child is age 18 through 
                22 and attending an approved educational 
                institution, or the child is age 18 or over and 
                became permanently incapable of self-support 
                prior to reaching age 18.
    The Committee bill would also codify benefit rates that 
were increased as a result of the Veterans' Compensation Cost-
of-Living Adjustment Act of 2007, Public Law 110-111.
    The Congressional Budget Office (hereinafter, ``CBO'') 
currently estimates that the COLA to be provided to Social 
Security recipients in 2009 will be 2.8 percent.

                       Background and Discussion


A. Disability compensation

    The service-connected disability compensation program under 
chapter 11 of title 38, United States Code, provides monthly 
cash benefits to veterans who have disabilities incurred or 
aggravated during active duty in the Armed Forces.
    The amount of compensation paid depends on the nature and 
severity of the veteran's disability or combination of 
disabilities and the extent to which the disability impairs 
earning capacity. VA rates compensable disabilities according 
to its Schedule for Rating Disabilities on a graduated scale 
ranging from 10 to 100 percent, in 10 percent increments. VA 
pays higher monthly rates (known as ``special monthly 
compensation'') to disabled veterans with certain specific, 
very severe disabilities or combinations of disabilities.
    According to VA, as set forth in its fiscal year 2009 
budget, the department estimates that it will provide 
disability compensation to 3,014,841 veterans with service-
connected disabilities in fiscal year 2009. Among the veterans 
estimated to receive such compensation are 2 World War I 
veterans; 267,250 World War II veterans; 157,690 Korean-
conflict veterans; 1,031,410 Vietnam-era veterans; 956,090 
veterans of the Persian Gulf War era; and 602,399 veterans who 
served during peacetime.
    A veteran with a disability rated at 30 percent or more may 
receive additional compensation on behalf of the veteran's 
spouse, children, and dependent parents. These dependents' 
allowances are prorated according to the percentage of 
disability.

B. Dependency and indemnity compensation

    Under chapter 13 of title 38, United States Code, VA pays 
DIC to the survivors of servicemembers or veterans who died on 
or after January 1, 1957, from a disease or injury incurred or 
aggravated during military service. Survivors eligible for DIC 
include surviving spouses, unmarried children under the age of 
18, children age 18 or older who are permanently incapable of 
self-support, children between the ages of 18 and 22 who are 
enrolled in school, and certain needy parents. Under section 
5312 of title 38, United States Code, parents' DIC rates are 
adjusted automatically at the same time and by the same 
percentage as Social Security and VA pension benefits. 
Surviving spouses, children, and parents who are receiving 
death compensation based on deaths before January 1, 1957, may 
elect to receive DIC instead of death compensation.
    For deaths on or after January 1, 1957, but prior to 
January 1, 1993, surviving spouses received DIC at rates 
determined by the pay grade (service rank) of the deceased 
veteran. For deaths on or after January 1, 1993, DIC is paid at 
a flat rate. Surviving spouses currently receive $1,091 per 
month and, if the deceased veteran was totally disabled for 
eight years prior to death, an additional $233 per month. 
Surviving spouses who had been receiving benefits under the 
prior DIC program are paid under whichever program will pay the 
higher benefit.
    A surviving spouse who is so disabled as to be housebound 
or in need of regular aid and attendance is eligible to receive 
an additional amount. A surviving spouse also may receive 
additional allowances on behalf of the veteran's surviving 
children.
    Children are entitled to DIC if there is no surviving 
spouse, if they are 18 years of age or older and became 
permanently incapable of self-support before reaching age 18, 
or if they are 18 to 22 years old and pursuing an approved 
course of education.
    Parents of deceased veterans whose incomes are below 
statutorily prescribed income thresholds are eligible for DIC 
under section 1315 of title 38, United States Code. As 
previously noted, parents' DIC rates are adjusted automatically 
at the same time and by the same percentage as Social Security 
and VA pension benefits.
    In its fiscal year 2009 budget, VA estimates that it will 
pay DIC benefits to 342,669 survivors, a total that includes 
surviving spouses, children, and needy surviving parents.
    Under section 1318 of title 38, United States Code, VA pays 
benefits at DIC rates to the surviving spouses and children of 
veterans whose deaths are not service-connected if the veteran, 
immediately prior to his or her death, had been receiving (or 
had been entitled to receive) compensation at the 100 percent 
rate continuously for 10 or more years or for at least five 
years from the date of discharge or release from active duty. 
VA also pays DIC benefits to the surviving spouses and children 
of veterans who were former prisoners of war who die after 
September 30, 1999, and whose deaths were not service-connected 
if the veteran had been receiving (or had been entitled to 
receive) compensation at the 100 percent rate continuously for 
not less than one year preceding death.

Committee bill

    The Committee bill would direct VA to compute and provide 
increases in the monthly rates of compensation and DIC, 
effective December 1, 2008. The rates would be increased by the 
same percentage as the Social Security and VA pension COLA that 
will take effect on that date. In accordance with section 8031 
of the Balanced Budget Act of 1997 (Public Law 105-33), amounts 
of compensation so computed that are not even multiples of $1 
will be rounded down to the next lower whole dollar amount. In 
2003, this provision was extended until 2013 by section 706 of 
Public Law 108- 183.
    The increases in DIC would automatically result in 
identical percentage increases in benefits paid at DIC rates 
under section 1318 of title 38, United States Code, to the 
surviving spouses and children of veterans who had a service-
connected disability at the time of death for which they 
continuously were rated totally disabled for at least (1) 10 
years, (2) five years from the date of discharge from active 
duty, or (3) one year if the veteran was a former prisoner of 
war who died after September 30, 1999, and whose death was not 
service-connected if the veteran had been receiving (or had 
been entitled to receive) compensation at the 100 percent rate 
continuously for not less than one year preceding death.
    Under section 156(e)(1)(A) of Public Law 97-377, the DIC 
increases also would automatically result in the same 
percentage increases in Social Security benefits that were 
terminated by section 2205 of the Omnibus Budget Reconciliation 
Act of 1981 (hereinafter, ``OBRA 1981'') (Public Law 97-35). 
Prior to OBRA 1981, those Social Security benefits had been 
paid to certain surviving spouses of those who died on active 
duty or from a service-connected disability on behalf of their 
children under 18 and children over age 19 who were secondary-
school students; OBRA 1981 reduced the eligibility cutoff age 
from 18 to 16 years old.
    Section 314 of Public Law 100-322 amended section 156(a)(1) 
of Public Law 97-377, the Further Continuing Appropriations Act 
of 1993, to restore the benefits eliminated by OBRA 1981. The 
DIC increase also would apply to these restored benefits, 
effective December 1, 2000.
    The CBO, in its most recent baseline, estimated that the 
Social Security COLA affecting fiscal year 2009 payments, and 
thus the COLA provided for by the Committee bill, will be 2.8 
percent. The actual Social Security COLA could differ from this 
estimate. Rather than selecting any particular percentage 
adjustment at the time the Committee ordered the bill reported, 
the Committee followed its prior practice of setting the COLA 
by reference to the Social Security increase. The Committee 
believes this is the most equitable means of providing 
increases in these important service-connected benefits.
    The Committee bill also contains a codification of benefit 
rates that were increased as a result of the Veterans' 
Compensation Cost-of-Living Adjustment Act of 2007, Public Law 
110-111.

               Congressional Budget Office Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the CBO, estimates that enactment of 
the Committee bill would, relative to current law, increase 
spending by $857 million in 2009 and by $1.1 billion annually 
in subsequent years, but that such increases in spending are 
assumed in the budget resolution baseline and thus will have no 
budgetary effect relative to the baseline. Enactment of the 
Committee bill would not affect the budget of state, local, or 
tribal governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 17, 2008.
Hon. Daniel K. Akaka,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2617, the Veterans' 
Compensation Cost-of-Living Adjustment Act of 2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

S. 2617--Veterans' Compensation Cost-of-Living Adjustment Act of 2008

    S. 2617 would increase the amounts paid to veterans for 
disability compensation and to their survivors for dependency 
and indemnity compensation by the same cost-of-living 
adjustment (COLA) payable to Social Security recipients. The 
increase would take effect on December 1, 2008, and the results 
of the adjustment would be rounded to the next lower dollar. S. 
2617 also would codify the rates of disability compensation as 
adjusted by the 2007 COLA.
    The COLA that would be authorized by this bill is assumed 
in CBO's baseline, pursuant to section 257 of the Balanced 
Budget and Emergency Deficit Control Act, and savings from 
rounding it down were achieved by the Balanced Budget Act of 
1997 (Public Law 105-33) and extended to 2013 by the Veterans 
Benefits Act of 2003 (Public Law 108-183).
    Because the COLA is assumed in CBO's baseline, the COLA 
provision would have no budgetary effect relative to that 
baseline. The additional costs assumed in the baseline are $857 
million in 2009 and about $1.1 billion in subsequent years. 
This estimate assumes that the COLA effective on December 1, 
2008, will be 2.8 percent.
    The Social Security COLA, which would apply to the 
veterans' benefits, is based on the increase in the consumer 
price index for urban wage earners and clerical workers (CPI-W) 
from the third-quarter of one calendar year to the third-
quarter of the next year. Through June 2008, the CPI-W had 
increased by 5.6 percent from its level in June 2007. It is 
therefore very likely that the veterans' COLA would be 
substantially greater than 2.8 percent and that CBO will revise 
its baseline projection upward to reflect a higher COLA.
    S. 2617 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    On May 12, 2008, CBO transmitted a cost estimate for H.R. 
5826, the Veterans' Compensation Cost-of-Living Adjustment Act 
of 2008, as ordered reported by the House Committee on 
Veterans' Affairs on April 30, 2008. The estimated costs of the 
two bills are identical.
    The CBO staff contact for this estimate is Dwayne M. 
Wright. This estimate was approved by Peter H. Fontaine, 
Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that S. 2617 would not entail any regulation of 
individuals or businesses or result in any impact on the 
personal privacy of any individuals and that the paperwork 
resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the following is a tabulation of 
votes cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 26, 2008, meeting. On that date, 
the Committee, by voice vote, ordered to report S. 2617, as 
amended, a bill to increase, effective as of December 1, 2008, 
the rates of compensation for veterans with service-connected 
disabilities and the rates of dependency and indemnity 
compensation for the survivors of certain disabled veterans.

                             Agency Report

    On May 7, 2008, Keith Pedigo, Associate Deputy Under 
Secretary for Policy and Program Management, Department of 
Veterans Affairs, appeared before the Committee on Veterans' 
Affairs and submitted testimony on, among other things, S. 
2617. Excerpts from this statement are reprinted below:

STATEMENT OF KEITH PEDIGO, ASSOCIATE DEPUTY UNDER SECRETARY FOR POLICY 
         AND PROGRAM MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS

    Mr. Chairman and Members of the Committee, good morning. I 
am pleased to be here today to provide the Department of 
Veterans Affairs (VA) views on pending benefits legislation. I 
will not be able to address a few of the bills on today's 
agenda because VA received them in insufficient time to 
coordinate the Administration's position and cost estimates, 
but we will provide that information in writing for the record.

           *       *       *       *       *       *       *

    S. 2617, the ``Veterans' Compensation Cost-of-Living 
Adjustment Act of 2008,'' would authorize a cost-of-living 
adjustment (COLA) in the rates of disability compensation and 
dependency and indemnity compensation (DIC). This bill would 
direct the Secretary of Veterans Affairs to increase 
administratively the rates of compensation for service-disabled 
veterans and of DIC for the survivors of veterans whose deaths 
are service related, effective December 1, 2008. Consistent 
with the President's FY 2009 budget request, the rate of 
increase would be the same as the COLA that will be provided 
under current law to Social Security recipients, which is 
currently estimated to be 2.5 percent. We believe this COLA is 
necessary and appropriate to protect the benefits of affected 
veterans and their survivors from the eroding effects of 
inflation. These worthy beneficiaries deserve no less.
    We estimate that enactment of this bill would cost $687.2 
million during FY 2009, $4.2 billion over the 5-year period FY 
2009 through FY 2013, and $9.2 billion over the 10-year period 
FY 2009 through FY 2018. However, the cost is already assumed 
in the budget baseline, and, therefore, enactment of this 
provision would not result in any additional cost.

           *       *       *       *       *       *       *


                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the Committee bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 38. VETERANS' BENEFITS

           *       *       *       *       *       *       *


PART II. GENERAL BENEFITS

           *       *       *       *       *       *       *



CHAPTER 11. COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

           *       *       *       *       *       *       *



Subchapter II. Wartime Disability Compensation

           *       *       *       *       *       *       *



SEC. 1114. RATES OF WARTIME DISABILITY COMPENSATION

    For the purposes of section 1110 of this title--
    (a) if and while the disability is rated 10 percent the 
monthly compensation shall be [$115] $117;
    (b) if and while the disability is rated 20 percent the 
monthly compensation shall be [$225] $230;
    (c) if and while the disability is rated 30 percent the 
monthly compensation shall be [$348] $356;
    (d) if and while the disability is rated 40 percent the 
monthly compensation shall be [$501] $512;
    (e) if and while the disability is rated 50 percent the 
monthly compensation shall be [$712] $728;
    (f) if and while the disability is rated 60 percent the 
monthly compensation shall be [$901] $921;
    (g) if and while the disability is rated 70 percent the 
monthly compensation shall be [$1,135] $1,161;
    (h) if and while the disability is rated 80 percent the 
monthly compensation shall be [$1,319] $1,349;
    (i) if and while the disability is rated 90 percent the 
monthly compensation shall be [$1,483] $1,517;
    (j) if and while the disability is rated as total the 
monthly compensation shall be [$2,471] $2,527;
    (k) if the veteran, as the result of service-connected 
disability, has suffered the anatomical loss or loss of use of 
one or more creative organs, or one foot, or one hand, or both 
buttocks, or blindness of one eye, having only light 
perception, has suffered complete organic aphonia with constant 
inability to communicate by speech, or deafness of both ears, 
having absence of air and bone conduction, or, in the case of a 
woman veteran, has suffered the anatomical loss of 25 percent 
or more of tissue from a single breast or both breasts in 
combination (including loss by mastectomy or partial 
mastectomy) or has received radiation treatment of breast 
tissue, the rate of compensation therefor shall be [$89] $91 
per month for each such loss or loss of use independent of any 
other compensation provided in subsections (a) through (j) or 
subsection (s) of this section but in no event to exceed 
[$3,075] $3,145 per month; and in the event the veteran has 
suffered one or more of the disabilities heretofore specified 
in this subsection, in addition to the requirement for any of 
the rates specified in subsections (l) through (n) of this 
section, the rate of compensation shall be increased by [$89] 
$91 per month for each such loss or loss of use, but in no 
event to exceed [$4,313] $4,412 per month;
    (l) if the veteran, as the result of service-connected 
disability, has suffered the anatomical loss or loss of use of 
both feet, or of one hand and one foot, or is blind in both 
eyes, with 5/200 visual acuity or less, or is permanently 
bedridden or with such significant disabilities as to be in 
need of regular aid and attendance, the monthly compensation 
shall be [$3,075] $3,145;
    (m) if the veteran, as the result of service-connected 
disability, has suffered the anatomical loss or loss of use of 
both hands, or of both legs at a level, or with complications, 
preventing natural knee action with prostheses in place, or of 
one arm and one leg at levels, or with complications, 
preventing natural elbow and knee action with prostheses in 
place, or has suffered blindness in both eyes having only light 
perception, or has suffered blindness in both eyes, rendering 
such veteran so significantly disabled as to be in need of 
regular aid and attendance, the monthly compensation shall be 
[$3,392] $3,470;
    (n) if the veteran, as the result of service-connected 
disability, has suffered the anatomical loss or loss of use of 
both arms at levels, or with complications, preventing natural 
elbow action with prostheses in place, has suffered the 
anatomical loss of both legs so near the hip as to prevent the 
use of prosthetic appliances, or has suffered the anatomical 
loss of one arm and one leg so near the shoulder and hip as to 
prevent the use of prosthetic appliances, or has suffered the 
anatomical loss of both eyes, or has suffered blindness without 
light perception in both eyes, the monthly compensation shall 
be [$3,860] $3,948;
    (o) if the veteran, as the result of service-connected 
disability, has suffered disability under conditions which 
would entitle such veteran to two or more of the rates provided 
in one or more subsections (l) through (n) of this section, no 
condition being considered twice in the determination, or if 
the veteran has suffered bilateral deafness (and the hearing 
impairment in either one or both ears is service connected) 
rated at 60 percent or more disabling and the veteran has also 
suffered service-connected total blindness with 20/200 visual 
acuity or less, or if the veteran has suffered service-
connected total deafness in one ear or bilateral deafness (and 
the hearing impairment in either one or both ears is service 
connected) rated at 40 percent or more disabling and the 
veteran has also suffered service-connected blindness having 
only light perception or less, or if the veteran has suffered 
the anatomical loss of both arms so near the shoulder as to 
prevent the use of prosthetic appliances, the monthly 
compensation shall be [$4,313] $4,412;
    (p) in the event the veteran's service-connected 
disabilities exceed the requirements for any of the rates 
prescribed in this section, the Secretary may allow the next 
higher rate or an intermediate rate, but in no event in excess 
of [$4,313] $4,412. In the event the veteran has suffered 
service-connected blindness with 5/200 visual acuity or less 
and (1) has also suffered bilateral deafness (and the hearing 
impairment in either one or both ears is service connected) 
rated at no less than 30 percent disabling, the Secretary shall 
allow the next higher rate, or (2) has also suffered service-
connected total deafness in one ear or service-connected 
anatomical loss or loss of use of one hand or one foot, the 
Secretary shall allow the next intermediate rate, but in no 
event in excess of [$4,313] $4,412. In the event the veteran 
has suffered service-connected blindness, having only light 
perception or less, and has also suffered bilateral deafness 
(and the hearing impairment in either one or both ears is 
service connected) rated at 10 or 20 percent disabling, the 
Secretary shall allow the next intermediate rate, but in no 
event in excess of [$4,313] $4,412. In the event the veteran 
has suffered the anatomical loss or loss of use, or a 
combination of anatomical loss and loss of use, of three 
extremities, the Secretary shall allow the next higher rate or 
intermediate rate, but in no event in excess of [$4,313] 
$4,412. Any intermediate rate under this subsection shall be 
established at the arithmetic mean, rounded down to the nearest 
dollar, between the two rates concerned;
    (r) Subject to section 5503(c) of this title, if any 
veteran, otherwise entitled to compensation authorized under 
subsection (o) of this section, at the maximum rate authorized 
under subsection (p) of this section, or at the intermediate 
rate authorized between the rates authorized under subsections 
(n) and (o) of this section and at the rate authorized under 
subsection (k) of this section, is in need of regular aid and 
attendance, then, in addition to such compensation--
          (1) the veteran shall be paid a monthly aid and 
        attendance allowance at the rate of [$1,851] $1,893; or
          (2) if the veteran, in addition to such need for 
        regular aid and attendance, is in need of a higher 
        level of care, such veteran shall be paid a monthly aid 
        and attendance allowance at the rate of [$2,757] 
        $2,820, in lieu of the allowance authorized in clause 
        (1) of this subsection, if the Secretary finds that the 
        veteran, in the absence of the pro vision of such care, 
        would require hospitalization, nursing home care, or 
        other residential institutional care.
    For the purposes of clause (2) of this subsection, need for 
a higher level of care shall be considered to be need for 
personal health-care services provided on a daily basis in the 
veteran's home by a person who is licensed to provide such 
services or who provides such services under the regular 
supervision of a licensed health-care professional. The 
existence of the need for such care shall be determined by a 
physician employed by the Department or, in areas where no such 
physician is available, by a physician carrying out such 
function under contract or fee arrangement based on an 
examination by such physician. For the purposes of section 1134 
of this title, such allowance shall be considered as additional 
compensation payable for disability.
    (s) If the veteran has a service-connected disability rated 
as total, and (1) has additional service-connected disability 
or disabilities independently ratable at 60 percent or more, 
or, (2) by reason of such veteran's service-connected 
disability or disabilities, is permanently housebound, then the 
monthly compensation shall be [$2,766] $2,829. For the purpose 
of this subsection, the requirement of ``permanently 
housebound'' will be considered to have been met when the 
veteran is substantially confined to such veteran's house (ward 
or clinical areas, if institutionalized) or immediate premises 
due to a service-connected disability or disabilities which it 
is reasonably certain will remain throughout such veteran's 
lifetime.

SEC. 1115. ADDITIONAL COMPENSATION FOR DEPENDENTS

           *       *       *       *       *       *       *


    (1) If and while rated totally disabled and--
          (A) has a spouse but no child, [$139] $142;
          (B) has a spouse and one or more children, [$240] 
        $245 plus [$70] $71 for each child in excess of one;
          (C) has no spouse but one or more children, [$94] $96 
        plus [$70] $71 for each child in excess of one;
          (D) has a parent dependent upon such veteran for 
        support, then, in addition to the above amounts, [$112] 
        $114 for each parent so dependent;
          (E) notwithstanding the other provisions of this 
        paragraph, the monthly payable amount on account of a 
        spouse who is (i) a patient in a nursing home or (ii) 
        blind, or so nearly blind or significantly disabled as 
        to need or require the regular aid and attendance of 
        another person, shall be [$265] $271 for a totally 
        disabled veteran and proportionate amounts for 
        partially disabled veterans in accordance with 
        paragraph (2) of this section; and
          (F) notwithstanding the other provisions of this 
        paragraph, the monthly amount payable on account of 
        each child who has attained the age of eighteen years 
        and who is pursuing a course of instruction at an 
        approved educational institution shall be [$222] $227 
        for a totally disabled veteran and proportionate 
        amounts for partially dis abled veterans in accordance 
        with paragraph (2) of this section.

           *       *       *       *       *       *       *


Subchapter VI--General Compensation Provisions

           *       *       *       *       *       *       *



SEC. 1162. CLOTHING ALLOWANCE

    The Secretary under regulations which the Secretary shall 
prescribe, shall pay a clothing allowance of [$662] $677 per 
year to each veteran who--

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CHAPTER 13--DEPENDENCY AND INDEMNITY COMPENSATION FOR SERVICE-CONNECTED 
DEATHS

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Subchapter II--Dependency and Indemnity Compensation

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SEC. 1311. DEPENDENCY AND INDEMNITY COMPENSATION TO A SURVIVING SPOUSE

    (a)(1) Dependency and indemnity compensation shall be paid 
to a surviving spouse at the monthly rate of [$1,067] $1,091.
    (2) The rate under paragraph (1) shall be increased by 
[$228] $233 in the case of the death of a veteran who at the 
time of death was in receipt of or was entitled to receive (or 
but for the receipt of retired pay or retirement pay was 
entitled to receive) compensation for a service-connected 
disability that was rated totally disabling for a continuous 
period of at least eight years immediately preceding death. In 
determining the period of a veteran's disability for purposes 
of the preceding sentence, only periods in which the veteran 
was married to the surviving spouse shall be considered.
    (3) * * *

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                 [Pay grade                     Monthly rate              Pay grade               Monthly rate
----------------------------------------------------------------------------------------------------------------
[E-1.......................................             $1,067  W-4..........................             $1,276
E-2........................................             $1,067  O-1..........................             $1,128
E-3........................................             $1,067  O-2..........................             $1,165
E-4........................................             $1,067  O-3..........................             $1,246
E-5........................................             $1,067  O-4..........................             $1,319
E-6........................................             $1,067  O-5..........................             $1,452
E-7........................................             $1,104  O-6..........................             $1,637
E-8........................................             $1,165  O-7..........................             $1,768
E-9........................................          \1\$1,215  O-8..........................             $1,941
W-1........................................             $1,128  O-9..........................             $2,076
W-2........................................             $1,172  O-10.........................          \2\$2,276
W-3........................................             $1,207  .............................  .................
----------------------------------------------------------------------------------------------------------------
[\1\If the veteran served as sergeant major of the Army, senior enlisted advisor of the Navy, chief master
  sergeant of the Air Force, sergeant major of the Marine Corps, or master chief petty officer of the Coast
  Guard, at the applicable time designated by section 1302 of this title, the surviving spouse's rate shall be
  $1,312.
[\2\If the veteran served as Chairman or Vice-Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army,
  Chief of Naval Operations, Chief of Staff of the Air Force, Commandant of the Marine Corps, or Commandant of
  the Coast Guard, at the applicable time designated by section 1302 of this title, the surviving spouse's rate
  shall be $2,443.]


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                 Pay grade                      Monthly rate              Pay grade               Monthly rate
----------------------------------------------------------------------------------------------------------------
E-1........................................             $1,091  W-4..........................             $1,305
E-2........................................             $1,091  O-1..........................             $1,153
E-3........................................             $1,091  O-2..........................             $1,191
E-4........................................             $1,091  O-3..........................             $1,274
E-5........................................             $1,091  O-4..........................             $1,349
E-6........................................             $1,091  O-5..........................             $1,485
E-7........................................             $1,129  O-6..........................             $1,674
E-8........................................             $1,191  O-7..........................             $1,808
E-9........................................          \1\$1,242  O-8..........................             $1,985
W-1........................................             $1,153  O-9..........................             $2,123
W-2........................................            $1,1984  O-10.........................          \2\$2,328
W-3........................................             $1,234  .............................  .................
----------------------------------------------------------------------------------------------------------------
\1\If the veteran served as sergeant major of the Army, senior enlisted advisor of the Navy, chief master
  sergeant of the Air Force, sergeant major of the Marine Corps, or master chief petty officer of the Coast
  Guard, at the applicable time designated by section 1302 of this title, the surviving spouse's rate shall be
  $1,342.
\2\If the veteran served as Chairman or Vice-Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army,
  Chief of Naval Operations, Chief of Staff of the Air Force, Commandant of the Marine Corps, or Commandant of
  the Coast Guard, at the applicable time designated by section 1302 of this title, the surviving spouse's rate
  shall be $2,499.

    (b) If there is a surviving spouse with one or more 
children below the age of eighteen of a deceased veteran, the 
dependency and indemnity compensation paid monthly to the 
surviving spouse shall be increased by [$265] $271 for each 
such child.
    (c) The monthly rate of dependency and indemnity 
compensation payable to a surviving spouse shall be increased 
by [$265] $271 if the spouse is (1) a patient in a nursing home 
or (2) blind, or so nearly blind or significantly disabled as 
to need or require the regular aid and attendance of another 
person.
    (d) The monthly rate of dependency and indemnity 
compensation payable to a surviving spouse shall be increased 
by [$126] $128 if the surviving spouse is, by reason of 
disability, permanently housebound but does not qualify for the 
aid and attendance allowance under subsection (c) of this 
section. For the purposes of this subsection, the requirement 
of ``permanently housebound'' will be considered to have been 
met when the surviving spouse is substantially confined to such 
surviving spouse's home (ward or clinical areas, if 
institutionalized) or immediate premises by reason of a 
disability or disabilities which it is reasonably certain will 
remain throughout such surviving spouse's lifetime.

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SEC. 1313. DEPENDENCY AND INDEMNITY COMPENSATION TO CHILDREN

    (a) Whenever there is no surviving spouse of a deceased 
veteran entitled to dependency and indemnity compensation, 
dependency and indemnity compensation shall be paid in equal 
shares to the children of the deceased veteran at the following 
monthly rates:
          (1) one child, [$452] $462;
          (2) two children, [$649] $663;
          (3) three children, [$846] $865; and
          (4) more than three children, [$846] $865, plus 
        [$162] $165 for each child in excess of three.

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SEC. 1314. SUPPLEMENTAL DEPENDENCY AND INDEMNITY COMPENSATION TO 
                    CHILDREN

    (a) In the case of a child entitled to dependency and 
indemnity compensation who has attained the age of eighteen and 
who, while under such age, became permanently incapable of 
self-support, the dependency and indemnity compensation paid 
monthly to such child shall be increased by [$265] $271.
    (b) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's deceased spouse) who has attained the age of 
eighteen and who, while under such age, became permanently 
incapable of self-support, dependency and indemnity 
compensation shall be paid monthly to each such child, 
concurrently with the payment of dependency and indemnity 
compensation to the surviving spouse, in the amount of [$452] 
$462.
    (c) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's deceased spouse) who has attained the age of 
eighteen and who, while under the age of twenty-three, is 
pursuing a course of instruction at an educational institution 
approved under section 104 of this title, dependency and 
indemnity compensation shall be paid monthly to each such 
child, concurrently with the payment of dependency and 
indemnity compensation to the surviving spouse, in the amount 
of [$225] $230.